Friday, October 20, 2017

This week’s meeting of EU leaders concluded with the verdict that there had been insufficient progress in the negotiations to move onto discussion of a future trade deal. That was to be expected. But the Brexit talks finally appear to have some momentum.

Why, then, are EU27 leaders ready to waste almost two months, until the summit of December 14th to progress further? That is when they will hopefully decide to start talks on Britain’s future trade relationship with the EU and a transition agreement to avoid a “cliff edge” scenario when the UK leaves the EU in March 2019.

During those two months, they willat leastsort out their vision for the transition and a mandate for Barnier if discussions ever get to trade. This feet-dragging is another example of the EU27 hoping that the UK may not leave after all when they should be agreeing on what their objectives and red lines are at the negotiating table.

Before Europe’s leaders met in Brussels yesterday, the summit conclusions had beenamended– at the request of France and Germany – to make clear to the UK it is by no means guaranteed that there will have been “sufficient progress” on the financial settlement, citizens’ rights and the “Irish border, as requested by the EU side.

The lattershouldn’tbe an obstacle and is being discussed to create a political understanding that there can’t be a hard border. But the border issue cannot be resolved until the trade relationship is being discussed.

On citizens’ rights, a lot of progress has been made and the UKmadefurther concessions yesterday, clarifying that EU citizens settling in Britain will no longer need to have Comprehensive Sickness Insurance and that post-Brexit family reunification would bepossibleafter all. Still, the EU27 insist on a role for the European Court of Justice. Here, the EU has already watered down its initial firm demand for the UK to completely submit itself to the court. Now it onlywantsBritain to agree to “pay due regard to” ECJ judgments.

The money was the tricky part before this week’s summit. And it remains tricky now. But even here some clarity is emerging, and it is becoming clear what the sticking points are.

While the UK has made clear that it is happy to pay for its share of the final two years of the EU’s long term 2014-2020 budget, it’s not convinced it should pay up for what can be considered the EU’s “debt” – or “reste à liquider” in Brussels talk. (Over the years, the EU has ignored the fact that it was never supposed to go into debt.)

Britain also thinks the EU’s pension liabilities for its eurocrats are only one third of the EU’s estimate, which wouldmeanBritain would only need to pay 3.5 billion euros instead of around 11 billion euros.

Meanwhile, Angela Merkel’s government’s stance is far from consistent. HavingpreventedMichel Barnier from making a gesture to the UK after Theresa May’s Florence speech, it has now started a charm offensive.

One German government sourcedeclared: “We believe that a whole lot has already happened and, regarding an issue which is of particular importance to us, that of the rights of citizens, we’ve advanced considerably”, adding that “I believe that the big questions about the future relationship between Britain and the European Union are of far more importance than the current dispute about finances.”

Merkel herself stated yesterday: “In contrast to how it is portrayed in the British press, my impression is that these talks are moving forward step by step…I have absolutely no doubts that if we are all focused … that we can get a good result. From my side there are no indications at all that we won’t succeed”

A French government source also struck a conciliatory note, stating: “We must not give in to a confrontational mindset. We are not in a mood for punishment or presents.”

Furthermore, the German foreign ministry isworkingon proposals for a “comprehensive free-trade accord” with the UK. Merkel hasn’t signed off on it yet but the aim is to have a broad partnership in areas including security, counter-terrorism, agriculture, energy and aviation, basically including everything that Germany wants,omittingaccess for UK banks, something that the UK will without doubt put on the table.

Is it the German fondness for procedure or is it because Merkel first wants to agree her “Jamaica” coalition with the liberals and the greens?According to the FT, “EU diplomats also think France and Germany see no harm in prolonging economic uncertainty that may make UK-based companies move to the continent.”

In any case it looks more likely now that the EU will effectively agree to start talking about the things that matter in December: the transition after Brexit and the UK’s future trade status. Theresa May is said to be pushing foran emergency dinner of EU leaders in November to prepare this.

Fourteen European trade and business organisations yesterdaywarnedthat an agreement on a period of transition after Brexit is urgently needed. They think a failure to reach a deal would send “costly shock waves” through established trade flows and supply chains. Signatories include the European Shippers Council, the Community of European Railways and the European Association of Automotive Suppliers, but expect this list to grow as we get nearer to 2018.

There’s broad acceptance that “no deal” would hit the UK hard. But more and more in the German media areraising the alarmthedangersfor Germany of “no deal”. The Cologne Institute for Economic Research hasstatedthat German companies’ supply chains would “burst” if there were WTO-tariffs, with the automotive, metal and chemical industries hard being hit particularly hard.

How happy would these industries be to see the German government refuse to start crucial negotiations over this until December, letting the talks break up over a few billions for the notoriouslywastefulEU budget? The Brexit negotiations finally have some momentum. Why take two months off?

Friday, October 13, 2017

After this week’s round of Brexit negotiations, alot of the attention went to EU negotiator Michel Barnier’s claim that there stillwas“deadlock” over the so-called divorce bill, and that talks about the UK’s trade status after March 2019 couldn’t start until that deadlock had been broken. EU Council President Donald Tusk has already suggested that would only happen in December at the earliest.

Barnier initially had this timing in mind when heplannedto require full agreement on the UK’s divorce before there could be any talk of the future relationship. In the final version of Barnier’s so-called “guidelines” from his masters in the 27 EU member states, however, only “sufficient progress”, a political concept, was required.

It seems the roles have been reversed and now it’s actually Barnier trying to convince member states to grant a concession to the UK while some of them resist. France, Germany and Romania arementionedby The Times as the trouble makers.

We don’t know whether Barnier is only pretending to play the good cop here. Although apparently Theresa May had been “taking dictation” from the EU for her Florence speech, so it could make sense that he promised May something in return. That would then not be a concession to start “trade talks” but merely “exploratory trade talks”.

It’s also less than clear what France, Germany and Romania are trying to achieve. The EU isafteran agreement on how the financial settlement will be calculated, not after a precise figure. Germany reportedly wants the UK’s promises on financial settlement “in writing”. Moreover, itwantsto have a new discussion on the mandate Barnier would get to negotiate the so-called “transition period” which Theresa May requested in her Florence speech and whereby the UK would keep access to the EU’s single market after March 2019. France on the other handwouldbe “slowing down the timetable behind the scenes” while at the same time “take more conciliatory lines in private because of the importance of Calais’ trading links to the country’s economy”. In any case, it looks like it’s not just the UK government that has been dragging its feet in the negotiations.

Perhaps Germany and France think that delaying a deal on money will somehow force Britain to pay more. That would be a risky bet. Linking money discussion with trade would on the other hand allow the EU side to “sell” trade access. People are getting nervous about this in Brussels. The EU’s powerful farming lobby is alreadywarningabout the Brexit hole endangering current EU agricultural policies, including huge subsidy payments to agricultural landowners. Britain would probably do a service to the EU27 taxpayer by not funding the EU budget so lavishly, given that any Brexit hole may focus minds in mainland Europe about the troublesome state of that spending.

At next week’s EU Summit, EU27 leaders are due to decide whether to move to trade talks. This week, a senior EU diplomat told Reuters that EU leaders don’t want to weaken Theresa May. Indeed, if she were to be replaced by a hardline Brexiteer Prime Minister, things would get more complicated for the EU27.

More fundamentally, there is no reason to despair. There was always going to be walkouts and drama during these negotiations and, after all, despite his rather gloomy tone, Barnier also said that after the Florence speech, there was“new momentum” in the talks.TheFinancial Timesnotes that despite the “standstill”,the EU side is actually “consideringbeginning work between the EU27 to “scope” transition terms — or start preparing their positions on the issue — before approving talks in December or later”.

Slowly, the doubtful partner in these negotiations is turning out to be the EU.

Sure, the UK government is haggling about the money, but EU27 leaders always knew that was going to happen, which is why they decided to only request “material progress” instead of a full agreement in order to move to trade talks. When it comes to citizens, the EU isrefusingto grant UK citizens free movement within the EU – despite asking the status quo for EU citizens in the UK, something that Britain is happy to grant, apart from some very specific rights related to family reunification. The EU is also still sticking to its odd demand for the UK to accept ECJ rule despite the fact it doesn’t have a judge in the ECJ, although some compromise on that is getting nearer, according to David Davis.

Interestingly, senior diplomats apparently don’tseethe Irish question, which is the third element related to the “divorce stage”, as an obstacle to making “sufficient progress”.

When it comes to the transitional period, the UK probably has provided more clarity than the EU by now on what it wants.

First of all, there’s the UK governmentproposalto join a temporary common customs union with the EU right after it has exited the EU and therefore also its customs union in March 2019. It hasn’t got the attention it deserves, but this solution would sort out the Northern Irish border question at least for the transition, as the UK’s tariffs would match Ireland’s. This would result in Britain to become similar toTurkeyduring the transition. Britain would effectively outsource much of its trade policy to Brussels. What’s not to like about this for the eurocrats?

The only thing the UK is demanding is that it is free to negotiate trade deals, which would then come into force the moment the UK leaves that common customs union. That would then also be when it has adapted its customs systems and has agreed technical solutions to achieveminimal disruptionat the Northern Irish border. The EU hasn’t properly reacted to that, and oddly, Ireland evendemandedsuch a solution in September,afterBritain had already suggested it – although Ireland said this should be a permanent and not a temporary arrangement.

Secondly, the UK has even made a lot of progress on the question whether it is willing to accept the EU offer to keep full EU market access after Brexit it would need to take over all EU regulation and accept supervision by the European Court of Justice and the European Commission. This week, Theresa Maydeclaredthat the UK may “start off with the ECJ governing the rules that we are part of” during the transition and that during this “strictly time-limited period” the UK will have left the EU and its institutions while “we are proposing that for this period access to one another’s markets should continue on current terms.”

Sure, there is Brexiteer resistance to this and there are lots of other details the UK government needs to spell out, but I’d argue that by now Britan has given a pretty clear picture of what it wants the transition to look like and I can’t really see many arguments for the EU side to disagree.

Half a million jobs would belostdue to a “hard” Brexit resulting in WTO-tariffs in the UK but 1.2 million would be lost in the EU27. Proportionally, the EU suffers a smaller hit but this is of course by no means politically acceptable in any way.Is it so much to ask for the EU27 to also make up their mind and not unnecessarily drag out these divorce negotiations, thereby delaying the crucial negotiations on transition and trade?

Thursday, October 05, 2017

For glyphosate, the active ingredient in the world’s most widely used weed killer, November 6th will be a date with destiny; EU member states, who are already meeting on 5 October about this, are expected to decide on whether to extend its market authorization for another 10 years. The last time the issue was tabled by the European Commission – in the summer of 2016 – France and Germany abstained and forced the EC to merely extend the license until the end of 2017. There has been a war of words between policymakers, scientists, and environmental activists raging ever since.

The process has gotten no less bumpy in the run-up to the vote, after new French Environment Minister Nicolas Hulot said Paris will not just abstain but outright vote against glyphosate, although recently it has said to be open to phasing it out. Driven by fears it may be harmful to consumers, Hulot’s stance has thrown farmers into a tizzy. The French Association of Wheat Producers (AGPB) has estimated that a ban on glyphosate would add € 900 million per year extra costs to the French cereals industry. A separate study from Ipsos went even further, putting damages at a whopping €2 billion when considering the costs for both cereals farmers and winemakers. But is glyphosateactually harmful, or is France on the verge of causing a self-inflicted, multi-billion euro faux pas for no good reason?

If the science community were a democracy, there would be little cause to question the herbicide’s safety record. On September 7th, the European Food Safety Authority (EFSA), a scientific review body of the European Union, became the latest regulatory body to conclude that there is no evidence of glyphosate having a negative effect on the human hormonal system. Earlier this year, the European Chemicals Agency (ECHA) determined the substance is not carcinogenic, as did the US Environmental Protection Agency (EPA) in a 2016 study. In addition to these two reports, almost a dozen national regulatory agencies – including Germany’s BfR and Canada’s PMRA – reached similar conclusions.

But these collective voices were drowned out by the International Agency for Research on Cancer (IARC),the World Health Organisation (WHO)’s cancer body. IARC provided activists with material justification for something they had long suspected: that glyphosate is a probable carcinogen. Ever since, the ensuing debate has fractured the international community, mixed politics and science, sparked court cases, and created an atmosphere so toxic that rational discussion has been rendered practically impossible.

The European Food Safety Authority (EFSA) was one of the first groups to counter IARC, accusing it in 2015 of ignoring a vast number of scientific studies that exonerated glyphosate while providing undue weight to a handful of papers that claimed otherwise. Bernhard Url, the director of EFSA, said his colleagues at the WHO were contributing to “the Facebook age of science” at a hearing in the European Parliament, stating: “You have a scientific assessment, you put it in Facebook and you count how many people like it. For us, this is no way forward.”

Url’s quip opened a war of words that has been raging ever since. Another tiff centered on the scientist leading the WHO review, who confessed in a California court case that he knew of data clearing glyphosate of carcinogenic potential but neglected to include it in IARC’s Monograph. On top of that, a prominent IARC scientist, Christopher Portier, appeared to be employed by the Environmental Defense Fund, an NGO with historic involvement in the anti-pesticides campaign. Out of the nearly 1,000 substances IARC has so far evaluated, only one has been deemed not to be a carcinogen; the controversy over glyphosate has only compounded fears that the body’s methods are somehow flawed.

It’s exposure, stupid

The bone of contention between the two camps revolves around exposure. For regulatory agencies, glyphosate safety should be evaluated in relation to the doses a normal person is expected to encounter in real-world conditions. The daily maximum dose varies, but the EPA puts it at 1.75 milligrams per kilogram of body weight. To put that into perspective, consider the cereal brand Cheerios, which had the highest level of glyphosate out of any product tested by activist group “Food Democracy Now!”. To cause any harm, a 175-pound adult would have to eat more than 1270 servings of the cereal a day to max out the daily acceptable intake. And a child of half that weight would have to eat more than 635 servings.

However, for IARC, Nicolas Hulot, and others, the mere fact that there is some risk, irrespective of exposure, is reason enough to outright ban the substance. For them, the reigning factor is the so-called precautionary principle. The principle states that if there is no scientific consensus on a substance’s effects on the human body, that chemical should be banned on suspicion alone. Acting on this impulse, campaigners have managed to obtain 1.3 million signatures against glyphosate.

The precautionary principle has some very obvious flaws. We can never be entirely sure of a chemical’s effects on the human body; had this principle been applied in the 1950s, we may well neverhave known the benefits of aspirin. It would simply never have been authorized today, according to Peter McNaughton, Sheild professor of pharmacology at the University of Cambridge. As so often happens, the loudest voices taking part in the glyphosate debate have almost no scientific background whatsoever.

This is exactly what Bernard Url warned against: trying to settle what’s harmful and what’s not by paying heed to petitions, rather than by trusting scientific experts. If the economic and even environmental cost of banning glyphosate is easy to determine, but its health risks are rebuffed by all regulatory agencies in the world, isn’t it more rational to extend market authorization? As risky as it may be for politicians to completely outsource their decision-making power to scientific experts, it’s far worse for them to solely rely on public opinion or online petitions.